DALLAS--(BUSINESS WIRE)--Aug. 1, 2018--
Holly Energy Partners, L.P. (“HEP” or the “Partnership”) (NYSE:HEP)
today reported financial results for the second quarter of 2018. Net
income attributable to HEP for the second quarter was $40.1 million
($0.38 per basic and diluted limited partner unit) compared to $41.3
million ($0.36 per basic and diluted limited partner unit) for the
second quarter of 2017.
Distributable cash flow was $65.2 million for the quarter, up $4.3
million, or 7.0% compared to the second quarter of 2017. HEP announced
its 55thconsecutive distribution increase on July 19, 2018,
raising the quarterly distribution from $0.655 to $0.660 per unit, which
represents an increase of 4.3% over the distribution for the second
quarter of 2017.
The decrease in earnings is primarily due to higher interest expense
partially offset by higher crude pipeline throughputs and revenues.
Commenting on our 2018 second quarter results, George Damiris, Chief
Executive Officer, stated, “Normal seasonality masks the underlying
strength in our business, particularly our Delaware Basin crude
gathering system.
“Looking forward, we expect the continued strength in crude gathering,
combined with contractual tariff escalators effective in the third
quarter, will drive a strong rebound in earnings growth and our
distribution coverage ratio, which we expect to be greater than 1.0x for
the second half of the year.”
Second Quarter 2018 Revenue Highlights
Revenues for the quarter were $118.8 million, an increase of $9.6
million compared to the second quarter of 2017. The increase is
primarily attributable to our acquisition of the remaining interest in
the SLC and Frontier pipelines, which led to an increase in overall
pipeline volumes of 24%.
-
Revenues from our refined product pipelines were $31.1 million
for both the second quarters of 2018 and 2017, and shipments averaged
185.6 thousand barrels per day ("mbpd") compared to 206.0 mbpd for the
second quarter of 2017. The volume decrease is mainly due to pipelines
servicing HollyFrontier Corporation's ("HFC" or "HollyFrontier") Woods
Cross refinery, which had lower throughput due to operational issues
at the refinery. Revenue remained constant due to contractual minimum
volume guarantees.
-
Revenues from our intermediate pipelines were $7.3 million for
both the second quarters ended 2018 and 2017, on shipments averaging
151.5 mbpd compared to 151.7 mbpd for the second quarter of 2017.
-
Revenues from our crude pipelines were $27.2 million, an
increase of $10.3 million, on shipments averaging 437.9 mbpd compared
to 269.4 mbpd for the second quarter of 2017. The increases are mainly
attributable to our acquisition of the remaining interest in the SLC
and Frontier pipelines in the fourth quarter of 2017 as well as
increased volumes on our crude pipeline systems in New Mexico and
Texas.
-
Revenues from terminal, tankage and loading rack fees were
$34.4 million, a decrease of $2.0 million compared to the second
quarter of 2017. Refined products and crude oil terminalled in the
facilities averaged 505.1 mbpd compared to 529.0 mbpd for the second
quarter of 2017. The revenue and volume decreases are mainly due to
lower volumes at terminals associated with UNEV Pipeline, LLC and
lower volumes at our Tulsa tanks.
-
Revenues from refinery processing units were $18.8 million, an
increase of $1.3 million on throughputs averaging 71.1 mbpd compared
to 67.3 mbpd for the third quarter of 2017. The increase in revenue is
mainly due to higher volumes at our Woods Cross refinery processing
units.
Revenues for the second quarter of 2018, include the recognition of $0.4
million of prior shortfalls billed to shippers in 2017. As of June 30,
2018, deferred revenue reflected in our consolidated balance sheet
related to shortfalls billed was $4.4 million.
Six Months Ended June 30, 2018 Revenue Highlights
Revenues for the six months ended June 30, 2018, were $247.6 million, an
increase of $32.9 million compared to the six months ended June 30,
2017. The increase is primarily attributable to our acquisition of the
remaining interest in the SLC and Frontier pipelines and the turnaround
at HollyFrontier'sNavajo refinery in the first quarter of 2017.
-
Revenues from our refined product pipelines were $66.0 million,
an increase of $4.6 million, on shipments averaging 201.2 mbpd
compared to 199.2 mbpd for the six months ended June 30, 2017.
Revenues increased due to the turnaround at HFC's Navajo refinery in
the first quarter of 2017.
-
Revenues from our intermediate pipelines were $15.7 million, an
increase of $3.2 million, on shipments averaging 139.3 mbpd compared
to 128.1 mbpd for the six months ended June 30, 2017. These increases
were principally due to the turnaround at HFC's Navajo refinery in the
first quarter of 2017.
-
Revenues from our crude pipelines were $56.0 million, an
increase of $22.2 million, on shipments averaging 462.5 mbpd compared
to 269.2 mbpd for the six months ended June 30, 2017. The increases
are mainly attributable to our acquisition of the remaining interest
in the SLC and Frontier pipelines in the fourth quarter of 2017 as
well as increased volumes on our crude pipeline systems in New Mexico
and Texas.
-
Revenues from terminal, tankage and loading rack fees were
$72.6 million, an increase of $2.4 million compared to the six months
ended June 30, 2017. Refined products and crude oil terminalled in the
facilities averaged 479.1 mbpd compared to 487.0 mbpd for the six
months ended June 30, 2017. The increase in revenue is primarily due
to higher volumes in several of our terminals as well as an adjustment
in revenue recognition. Total volumes decreased mainly due to lower
volumes at our Tulsa tanks, which are supported by minimum volume
commitments.
-
Revenues from refinery processing units were $37.4 million, an
increase of $0.5 million on throughputs averaging 69.0 mbpd compared
to 65.1 mbpd for the six months ended June 30, 2017. The increase in
revenue is mainly due to higher volumes at our Woods Cross refinery
processing units.
Revenues for the six months ended June 30, 2018, include the recognition
of $2.6 million of prior shortfalls billed to shippers in 2017 as they
did not exceed their minimum volume commitments within the contractual
make-up period.
Operating Costs and Expenses Highlights
Operating costs and expenses were $61.8 million and $126.3 million for
the three and six months ended June 30, 2018, representing an increase
of $5.2 million and $15.7 million from the three and six months ended
June 30, 2017. The increase is primarily due to new operating costs and
expenses related to our acquisition of the remaining interest in the SLC
and Frontier pipelines in the fourth quarter of 2017.
Interest expense was $17.6 million and $35.2 million for the three and
six months ended June 30, 2018, representing an increase of $3.9 million
and $7.9 million over the same periods of 2017. These increases are
primarily due to interest expense associated with the private placement
of an additional $100 million in aggregate principal amount of our 6%
Senior Notes due 2024 completed in the third quarter of 2017, higher
average balances outstanding under our senior secured revolving credit
facility, and market interest rate increases under that facility.
We have scheduled a webcast conference call today at 4:00 PM Eastern
Time to discuss financial results. This webcast may be accessed at:
https://event.webcasts.com/starthere.jsp?ei=1200323&tp_key=3e74bee54b.
An audio archive of this webcast will be available using the above noted
link through August 15, 2018.
About Holly Energy Partners, L.P.
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides
petroleum product and crude oil transportation, terminalling, storage
and throughput services to the petroleum industry, including
HollyFrontier Corporation subsidiaries. The Partnership, through its
subsidiaries and joint ventures, owns and/or operates petroleum product
and crude pipelines, tankage and terminals in Texas, New Mexico,
Arizona, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas,
as well as refinery processing units in Utah and Kansas.
HollyFrontier Corporation, headquartered in Dallas, Texas, is an
independent petroleum refiner and marketer that produces high value
light products such as gasoline, diesel fuel, jet fuel and other
specialty products. HollyFrontier operates through its subsidiaries a
135,000 barrels per stream day ("bpsd") refinery located in El Dorado,
Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd
refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located
in Cheyenne, Wyoming and a 45,000 bpsd refinery in Woods Cross, Utah.
HollyFrontier markets its refined products principally in the Southwest
U.S., the Rocky Mountains extending into the Pacific Northwest and in
other neighboring Plains states. Additionally, HollyFrontier owns
Petro-Canada Lubricants Inc., whose Mississauga, Ontario facility
produces 15,600 barrels per day of base oils and other specialized
lubricant products, and owns a 57% limited partner interest and the
non-economic general partner interest in Holly Energy Partners, L.P.
The statements in this press release relating to matters that are not
historical facts are “forward-looking statements” within the meaning of
the federal securities laws. These statements are based on our beliefs
and assumptions and those of our general partner using currently
available information and expectations as of the date hereof, are not
guarantees of future performance and involve certain risks and
uncertainties. Although we and our general partner believe that such
expectations reflected in such forward-looking statements are
reasonable, neither we nor our general partner can give assurance that
our expectations will prove to be correct. Therefore, actual outcomes
and results could materially differ from what is expressed, implied or
forecast in these statements. Any differences could be caused by a
number of factors including, but not limited to:
-
risks and uncertainties with respect to the actual quantities of
petroleum products and crude oil shipped on our pipelines and/or
terminalled, stored and throughput in our terminals;
-
the economic viability of HollyFrontier Corporation, Delek US
Holdings, Inc. and our other customers;
-
the demand for refined petroleum products in markets we serve;
-
our ability to purchase and integrate future acquired operations;
-
our ability to complete previously announced or contemplated
acquisitions;
-
the availability and cost of additional debt and equity financing;
-
the possibility of reductions in production or shutdowns at refineries
utilizing our pipeline and terminal facilities;
-
the effects of current and future government regulations and policies;
-
our operational efficiency in carrying out routine operations and
capital construction projects;
-
the possibility of terrorist or cyber attacks and the consequences of
any such attacks;
-
general economic conditions;
-
the impact of recent changes in tax laws and regulations that affect
master limited partnerships; and
-
other financial, operations and legal risks and uncertainties detailed
from time to time in our Securities and Exchange Commission filings.
The forward-looking statements speak only as of the date made and, other
than as required by law, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
RESULTS OF OPERATIONS (Unaudited)
Income, Distributable Cash Flow and Volumes
The
following tables present income, distributable cash flow and volume
information for the three and the six months ended June 30, 2018 and
2017.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Change from |
|
|
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|
|
|
(In thousands, except per unit data)
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
$
|
18,744
|
|
|
|
$
|
19,432
|
|
|
|
$
|
(688
|
)
|
Affiliates – intermediate pipelines
|
|
|
|
|
7,255
|
|
|
|
|
7,250
|
|
|
|
|
5
|
|
Affiliates – crude pipelines
|
|
|
|
|
18,479
|
|
|
|
|
16,919
|
|
|
|
|
1,560
|
|
|
|
|
|
|
44,478
|
|
|
|
|
43,601
|
|
|
|
|
877
|
|
Third parties – refined product pipelines
|
|
|
|
|
12,348
|
|
|
|
|
11,647
|
|
|
|
|
701
|
|
Third parties – crude pipelines
|
|
|
|
|
8,713
|
|
|
|
|
—
|
|
|
|
|
8,713
|
|
|
|
|
|
|
65,539
|
|
|
|
|
55,248
|
|
|
|
|
10,291
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
30,700
|
|
|
|
|
32,012
|
|
|
|
|
(1,312
|
)
|
Third parties
|
|
|
|
|
3,686
|
|
|
|
|
4,344
|
|
|
|
|
(658
|
)
|
|
|
|
|
|
34,386
|
|
|
|
|
36,356
|
|
|
|
|
(1,970
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates - refinery processing units
|
|
|
|
|
18,835
|
|
|
|
|
17,539
|
|
|
|
|
1,296
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
118,760
|
|
|
|
|
109,143
|
|
|
|
|
9,617
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
34,533
|
|
|
|
|
34,097
|
|
|
|
|
436
|
|
Depreciation and amortization
|
|
|
|
|
24,608
|
|
|
|
|
19,945
|
|
|
|
|
4,663
|
|
General and administrative
|
|
|
|
|
2,673
|
|
|
|
|
2,615
|
|
|
|
|
58
|
|
|
|
|
|
|
61,814
|
|
|
|
|
56,657
|
|
|
|
|
5,157
|
|
Operating income |
|
|
|
|
56,946
|
|
|
|
|
52,486
|
|
|
|
|
4,460
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of equity method investments
|
|
|
|
|
1,734
|
|
|
|
|
4,053
|
|
|
|
|
(2,319
|
)
|
Interest expense, including amortization
|
|
|
|
|
(17,626
|
)
|
|
|
|
(13,748
|
)
|
|
|
|
(3,878
|
)
|
Interest income
|
|
|
|
|
526
|
|
|
|
|
103
|
|
|
|
|
423
|
|
Gain on sale of assets and other
|
|
|
|
|
(53
|
)
|
|
|
|
89
|
|
|
|
|
(142
|
)
|
|
|
|
|
|
(15,419
|
)
|
|
|
|
(9,503
|
)
|
|
|
|
(5,916
|
)
|
Income before income taxes |
|
|
|
|
41,527
|
|
|
|
|
42,983
|
|
|
|
|
(1,456
|
)
|
State income tax expense
|
|
|
|
|
(28
|
)
|
|
|
|
(127
|
)
|
|
|
|
99
|
|
Net income |
|
|
|
|
41,499
|
|
|
|
|
42,856
|
|
|
|
|
(1,357
|
)
|
Allocation of net income attributable to noncontrolling interests
|
|
|
|
|
(1,356
|
)
|
|
|
|
(1,521
|
)
|
|
|
|
165
|
|
Net income attributable to Holly Energy Partners |
|
|
|
|
40,143
|
|
|
|
|
41,335
|
|
|
|
|
(1,192
|
)
|
General partner interest in net income, including incentive
distributions(1) |
|
|
|
|
—
|
|
|
|
|
(18,328
|
)
|
|
|
|
18,328
|
|
Limited partners’ interest in net income |
|
|
|
$
|
40,143
|
|
|
|
$
|
23,007
|
|
|
|
$
|
17,136
|
|
Limited partners’ earnings per unit – basic and diluted(1) |
|
|
|
$
|
0.38
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.36
|
|
Weighted average limited partners’ units outstanding |
|
|
|
|
105,429
|
|
|
|
|
64,086
|
|
|
|
|
64,086
|
|
EBITDA(2) |
|
|
|
$
|
81,879
|
|
|
|
$
|
75,052
|
|
|
|
$
|
6,827
|
|
Distributable cash flow(3) |
|
|
|
$
|
65,180
|
|
|
|
$
|
60,908
|
|
|
|
$
|
4,272
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd) |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
|
112,371
|
|
|
|
|
134,357
|
|
|
|
|
(21,986
|
)
|
Affiliates – intermediate pipelines
|
|
|
|
|
151,537
|
|
|
|
|
151,683
|
|
|
|
|
(146
|
)
|
Affiliates – crude pipelines
|
|
|
|
|
322,850
|
|
|
|
|
269,418
|
|
|
|
|
53,432
|
|
|
|
|
|
|
586,758
|
|
|
|
|
555,458
|
|
|
|
|
31,300
|
|
Third parties – refined product pipelines
|
|
|
|
|
73,196
|
|
|
|
|
71,612
|
|
|
|
|
1,584
|
|
Third parties – crude pipelines
|
|
|
|
|
115,011
|
|
|
|
|
—
|
|
|
|
|
115,011
|
|
|
|
|
|
|
774,965
|
|
|
|
|
627,070
|
|
|
|
|
147,895
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
446,089
|
|
|
|
|
461,329
|
|
|
|
|
(15,240
|
)
|
Third parties
|
|
|
|
|
59,035
|
|
|
|
|
67,657
|
|
|
|
|
(8,622
|
)
|
|
|
|
|
|
505,124
|
|
|
|
|
528,986
|
|
|
|
|
(23,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refinery processing units
|
|
|
|
|
71,117
|
|
|
|
|
67,310
|
|
|
|
|
3,807
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for pipelines and terminal assets (bpd) |
|
|
|
|
1,351,206
|
|
|
|
|
1,223,366
|
|
|
|
|
127,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
Change from |
|
|
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|
|
|
(In thousands, except per unit data)
|
Revenues |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
$
|
40,038
|
|
|
|
$
|
37,176
|
|
|
|
$
|
2,862
|
|
Affiliates – intermediate pipelines
|
|
|
|
|
15,724
|
|
|
|
|
12,534
|
|
|
|
|
3,190
|
|
Affiliates – crude pipelines
|
|
|
|
|
38,276
|
|
|
|
|
33,800
|
|
|
|
|
4,476
|
|
|
|
|
|
|
94,038
|
|
|
|
|
83,510
|
|
|
|
|
10,528
|
|
Third parties – refined product pipelines
|
|
|
|
|
25,930
|
|
|
|
|
24,185
|
|
|
|
|
1,745
|
|
Third parties – crude pipelines
|
|
|
|
|
17,740
|
|
|
|
|
—
|
|
|
|
|
17,740
|
|
|
|
|
|
|
137,708
|
|
|
|
|
107,695
|
|
|
|
|
30,013
|
|
Terminals, tanks and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
64,034
|
|
|
|
|
61,748
|
|
|
|
|
2,286
|
|
Third parties
|
|
|
|
|
8,533
|
|
|
|
|
8,415
|
|
|
|
|
118
|
|
|
|
|
|
|
72,567
|
|
|
|
|
70,163
|
|
|
|
|
2,404
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates - refinery processing units
|
|
|
|
|
37,369
|
|
|
|
|
36,919
|
|
|
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
247,644
|
|
|
|
|
214,777
|
|
|
|
|
32,867
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
70,735
|
|
|
|
|
66,586
|
|
|
|
|
4,149
|
|
Depreciation and amortization
|
|
|
|
|
49,750
|
|
|
|
|
38,722
|
|
|
|
|
11,028
|
|
General and administrative
|
|
|
|
|
5,795
|
|
|
|
|
5,249
|
|
|
|
|
546
|
|
|
|
|
|
|
126,280
|
|
|
|
|
110,557
|
|
|
|
|
15,723
|
|
Operating income |
|
|
|
|
121,364
|
|
|
|
|
104,220
|
|
|
|
|
17,144
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of equity method investments
|
|
|
|
|
3,013
|
|
|
|
|
5,893
|
|
|
|
|
(2,880
|
)
|
Interest expense, including amortization
|
|
|
|
|
(35,207
|
)
|
|
|
|
(27,287
|
)
|
|
|
|
(7,920
|
)
|
Interest income
|
|
|
|
|
1,041
|
|
|
|
|
205
|
|
|
|
|
836
|
|
Loss on early extinguishment of debt
|
|
|
|
|
—
|
|
|
|
|
(12,225
|
)
|
|
|
|
12,225
|
|
Gain (loss) on sale of assets and other
|
|
|
|
|
33
|
|
|
|
|
162
|
|
|
|
|
(129
|
)
|
|
|
|
|
|
(31,120
|
)
|
|
|
|
(33,252
|
)
|
|
|
|
2,132
|
|
Income before income taxes |
|
|
|
|
90,244
|
|
|
|
|
70,968
|
|
|
|
|
19,276
|
|
State income tax expense
|
|
|
|
|
(110
|
)
|
|
|
|
(233
|
)
|
|
|
|
123
|
|
Net income |
|
|
|
|
90,134
|
|
|
|
|
70,735
|
|
|
|
|
19,399
|
|
Allocation of net income attributable to noncontrolling interests
|
|
|
|
|
(3,823
|
)
|
|
|
|
(3,837
|
)
|
|
|
|
14
|
|
Net income attributable to Holly Energy Partners |
|
|
|
|
86,311
|
|
|
|
|
66,898
|
|
|
|
|
19,413
|
|
General partner interest in net income, including incentive
distributions(1) |
|
|
|
|
—
|
|
|
|
|
(35,466
|
)
|
|
|
|
35,466
|
|
Limited partners’ interest in net income |
|
|
|
$
|
86,311
|
|
|
|
$
|
31,432
|
|
|
|
$
|
54,879
|
|
Limited partners’ earnings per unit—basic and diluted(1) |
|
|
|
$
|
0.82
|
|
|
|
$
|
0.49
|
|
|
|
$
|
0.33
|
|
Weighted average limited partners’ units outstanding |
|
|
|
|
104,637
|
|
|
|
|
63,602
|
|
|
|
|
41,035
|
|
EBITDA(2) |
|
|
|
$
|
170,337
|
|
|
|
$
|
132,935
|
|
|
|
$
|
37,402
|
|
Adjusted EBITDA(2) |
|
|
|
$
|
170,337
|
|
|
|
$
|
145,160
|
|
|
|
$
|
25,177
|
|
Distributable cash flow(3) |
|
|
|
$
|
134,279
|
|
|
|
$
|
118,197
|
|
|
|
$
|
16,082
|
|
|
|
|
|
|
|
|
|
|
|
|
Volumes (bpd) |
|
|
|
|
|
|
|
|
|
|
Pipelines:
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refined product pipelines
|
|
|
|
|
128,498
|
|
|
|
|
120,886
|
|
|
|
|
7,612
|
|
Affiliates – intermediate pipelines
|
|
|
|
|
139,333
|
|
|
|
|
128,143
|
|
|
|
|
11,190
|
|
Affiliates – crude pipelines
|
|
|
|
|
341,922
|
|
|
|
|
269,155
|
|
|
|
|
72,767
|
|
|
|
|
|
|
609,753
|
|
|
|
|
518,184
|
|
|
|
|
91,569
|
|
Third parties – refined product pipelines
|
|
|
|
|
72,720
|
|
|
|
|
78,339
|
|
|
|
|
(5,619
|
)
|
Third parties – crude pipelines
|
|
|
|
|
120,568
|
|
|
|
|
—
|
|
|
|
|
120,568
|
|
|
|
|
|
|
803,041
|
|
|
|
|
596,523
|
|
|
|
|
206,518
|
|
Terminals and loading racks:
|
|
|
|
|
|
|
|
|
|
|
Affiliates
|
|
|
|
|
418,439
|
|
|
|
|
418,365
|
|
|
|
|
74
|
|
Third parties
|
|
|
|
|
60,684
|
|
|
|
|
68,646
|
|
|
|
|
(7,962
|
)
|
|
|
|
|
|
479,123
|
|
|
|
|
487,011
|
|
|
|
|
(7,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Affiliates – refinery processing units
|
|
|
|
|
69,008
|
|
|
|
|
65,082
|
|
|
|
|
3,926
|
|
|
|
|
|
|
|
|
|
|
|
|
Total for pipelines and terminal assets (bpd) |
|
|
|
|
1,351,172
|
|
|
|
|
1,148,616
|
|
|
|
|
202,556
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Prior to the equity restructuring transaction on October 31, 2017,
net income attributable to Holly Energy Partners was allocated
between limited partners and the general partner interest in
accordance with the provisions of the partnership agreement. HEP net
income allocated to the general partner included incentive
distributions that were declared subsequent to quarter end. There
were no distributions made on the general partner interest after
October 31, 2017, and general partner distributions were $18.7
million and $36.5 million for the three and the six months ended
June 30, 2017, respectively.
|
|
|
|
(2)
|
|
Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) is calculated as net income attributable to Holly Energy
Partners plus (i) interest expense, net of interest income, (ii)
state income tax and (iii) depreciation and amortization. Adjusted
EBITDA is calculated as EBITDA plus loss on early extinguishment of
debt. EBITDA and Adjusted EBITDA are not calculations based upon
generally accepted accounting principles ("GAAP"). However, the
amounts included in the EBITDA and Adjusted EBITDA calculations are
derived from amounts included in our consolidated financial
statements. EBITDA and Adjusted EBITDA should not be considered as
alternatives to net income attributable to Holly Energy Partners or
operating income, as indications of our operating performance or as
alternatives to operating cash flow as a measure of liquidity.
EBITDA and Adjusted EBITDA are not necessarily comparable to
similarly titled measures of other companies. EBITDA and Adjusted
EBITDA are presented here because they are widely used financial
indicators used by investors and analysts to measure performance.
EBITDA and Adjusted EBITDA are also used by our management for
internal analysis and as a basis for compliance with financial
covenants.
|
|
|
|
Set forth below is our calculation of EBITDA and Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
(In thousands)
|
Net income attributable to Holly Energy Partners |
|
|
|
$
|
40,143
|
|
|
|
$
|
41,335
|
|
|
|
$
|
86,311
|
|
|
|
$
|
66,898
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
16,867
|
|
|
|
|
12,982
|
|
|
|
|
33,691
|
|
|
|
|
25,751
|
|
Interest Income
|
|
|
|
|
(526
|
)
|
|
|
|
(103
|
)
|
|
|
|
(1,041
|
)
|
|
|
|
(205
|
)
|
Amortization of discount and deferred debt charges
|
|
|
|
|
759
|
|
|
|
|
766
|
|
|
|
|
1,516
|
|
|
|
|
1,536
|
|
State income tax expense
|
|
|
|
|
28
|
|
|
|
|
127
|
|
|
|
|
110
|
|
|
|
|
233
|
|
Depreciation and amortization
|
|
|
|
|
24,608
|
|
|
|
|
19,945
|
|
|
|
|
49,750
|
|
|
|
|
38,722
|
|
EBITDA |
|
|
|
$
|
81,879
|
|
|
|
$
|
75,052
|
|
|
|
$
|
170,337
|
|
|
|
$
|
132,935
|
|
Add loss on early extinguishment of debt
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
12,225
|
|
Adjusted EBITDA |
|
|
|
$
|
81,879
|
|
|
|
$
|
75,052
|
|
|
|
$
|
170,337
|
|
|
|
$
|
145,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
Distributable cash flow is not a calculation based upon GAAP.
However, the amounts included in the calculation are derived from
amounts presented in our consolidated financial statements, with the
general exception of maintenance capital expenditures. Distributable
cash flow should not be considered in isolation or as an alternative
to net income attributable to Holly Energy Partners or operating
income, as an indication of our operating performance, or as an
alternative to operating cash flow as a measure of liquidity.
Distributable cash flow is not necessarily comparable to similarly
titled measures of other companies. Distributable cash flow is
presented here because it is a widely accepted financial indicator
used by investors to compare partnership performance. It is also
used by management for internal analysis and our performance units.
We believe that this measure provides investors an enhanced
perspective of the operating performance of our assets and the cash
our business is generating.
|
|
|
|
Set forth below is our calculation of distributable cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
(In thousands)
|
Net income attributable to Holly Energy Partners |
|
|
|
$
|
40,143
|
|
|
|
$
|
41,335
|
|
|
|
$
|
86,311
|
|
|
|
$
|
66,898
|
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
24,608
|
|
|
|
|
19,945
|
|
|
|
|
49,750
|
|
|
|
|
38,722
|
|
Amortization of discount and deferred debt charges
|
|
|
|
|
759
|
|
|
|
|
766
|
|
|
|
|
1,516
|
|
|
|
|
1,536
|
|
Loss on early extinguishment of debt
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
12,225
|
|
Customer billings greater than revenue recognized
|
|
|
|
|
1,819
|
|
|
|
|
1,524
|
|
|
|
|
138
|
|
|
|
|
2,701
|
|
Maintenance capital expenditures (4) |
|
|
|
|
(987
|
)
|
|
|
|
(2,242
|
)
|
|
|
|
(1,305
|
)
|
|
|
|
(3,067
|
)
|
Decrease in environmental liability
|
|
|
|
|
(78
|
)
|
|
|
|
(313
|
)
|
|
|
|
(218
|
)
|
|
|
|
(559
|
)
|
Decrease in reimbursable deferred revenue
|
|
|
|
|
(1,243
|
)
|
|
|
|
(923
|
)
|
|
|
|
(2,420
|
)
|
|
|
|
(1,848
|
)
|
Other non-cash adjustments
|
|
|
|
|
159
|
|
|
|
|
816
|
|
|
|
|
507
|
|
|
|
|
1,589
|
|
Distributable cash flow |
|
|
|
$
|
65,180
|
|
|
|
$
|
60,908
|
|
|
|
$
|
134,279
|
|
|
|
$
|
118,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
Maintenance capital expenditures are capital expenditures made to
replace partially or fully depreciated assets in order to maintain
the existing operating capacity of our assets and to extend their
useful lives. Maintenance capital expenditures include expenditures
required to maintain equipment reliability, tankage and pipeline
integrity, safety and to address environmental regulations.
|
|
|
|
Set forth below is certain balance sheet data.
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
(In thousands)
|
Balance Sheet Data |
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
6,656
|
|
|
$
|
7,776
|
Working capital
|
|
|
|
$
|
6,403
|
|
|
$
|
18,906
|
Total assets
|
|
|
|
$
|
2,116,063
|
|
|
$
|
2,154,114
|
Long-term debt
|
|
|
|
$
|
1,395,599
|
|
|
$
|
1,507,308
|
Partners' equity (5) |
|
|
|
$
|
468,397
|
|
|
$
|
393,959
|
|
|
|
|
|
|
|
|
(5)
|
|
As a master limited partnership, we distribute our available cash,
which historically has exceeded our net income attributable to Holly
Energy Partners because depreciation and amortization expense
represents a non-cash charge against income. The result is a decline
in partners’ equity since our regular quarterly distributions have
exceeded our quarterly net income attributable to Holly Energy
Partners. Additionally, if the assets contributed and acquired from
HollyFrontier while we were a consolidated variable interest entity
of HollyFrontier had been acquired from third parties, our
acquisition cost in excess of HollyFrontier’s basis in the
transferred assets would have been recorded in our financial
statements as increases to our properties and equipment and
intangible assets at the time of acquisition instead of decreases to
partners’ equity.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005155/en/
Source: Holly Energy Partners, L.P.
Holly Energy Partners, L.P.
Richard L. Voliva III, 214-954-6511
Executive
Vice President and
Chief Financial Officer
or
Craig
Biery, 214-954-6511
Director, Investor Relations